.webp?width=1200&height=800&name=How-to-Recession-Proof-Your-Business%20(1).webp)
How equipped is your small business to survive a recession? When external factors drive revenues down – and they will, at times – what does a small business need to do to stay afloat?
Small businesses can be especially vulnerable during economic declines because they often lack the capital to cover temporary losses. Effective leaders prepare for this inevitability far in advance to mitigate the impact. Key to the prep is safeguarding a company’s greatest assets – its human resources. Sound HR practices are as vital to recession-proofing a business as cash flow, accounts payable and other financial concerns are.
RELATED: Prepare for the Retirement Boom to Avoid Business Bust >>
Here are seven HR strategies that can help to set up your small business for success when the going gets tough economically:
When the economy dips, businesses with a healthy workforce strategy already in place are in the best position to navigate through hard times.
Such a strategy includes workforce planning that a) establishes effective employee engagement, retention and development practices and b) ensures a business has the right talent in the right places operating at optimal productivity. Most importantly during a recessionary period, workforce planning includes creating contingency plans for downsizing, staffing changes and other necessary HR decisions. When leaders have those responses ready, they can shift gears during an economic downturn without bringing operations to a halt.
Recessions are fairly rare and thus are notoriously difficult to predict. But they are never a surprise. Rumors and signs will be evident everywhere, and employees may be on edge. If and when a recession occurs, be transparent with your workers, communicating early and often about where the company stands and how it plans to weather the downturn. This forthrightness is essential to building trust and keeping employees motivated.
Remember that effective communications are a two-way street. Make sure employees can ask questions and give feedback about ways to cut costs or streamline processes. This will empower them to become part of the solution – and could produce some great ideas.
It may sound ironic, but automating human resources processes is a cost-effective way to keep employees engaged and nourish a culture of transparency, especially when changes may be imminent. Consider adding tools that can automate routine HR work, such as employee onboarding, payroll and benefits enrollment.
In the face of a downturn, cost-cutting is inevitable, but – if at all possible – it should not happen at the expense of losing valuable talent.
Keeping skilled and experienced employees on your team promotes productivity, efficiency and much-needed continuity during disruptive times. It also boosts morale, creates a “we’re in this together” mindset and eliminates the costs of recruiting and training new people.
Retention during a recession may call for rethinking your company’s compensation strategies. If compensation adjustments are necessary, a professional employer organization (PEO) like Axcet HR Solutions can help you cross-check regional industry and position-specific salary levels with HR market conditions. With these insights, you can make pay decisions that are best for your company and your team.
RELATED: 5 Effective Employee Retention Strategies >>
During an economic downturn, your company may have fewer discretionary dollars to invest in employee training and development. Fortunately, developing your employees doesn’t have to require a big financial investment. Free and low-cost online learning programs like Udemy and Coursera let people drive their own development based on their personal skills gaps and interests.
You also can leverage your own or your employees’ expertise, asking those with certain skills or experience to present informal, in-house workshops to share their knowledge with others. Shadowing, interpersonal mentoring and small-group teaching are other ways to help your employees grow.
Making these opportunities available is a clear sign to your employees that the company values them. Being given a chance to grow, especially during uncertain economic times, will boost employee morale and minimize, if not eliminate, turnover.
Consider adopting work arrangements that give employees some flexibility in when, where and how they work. This strategy can help build employee loyalty when workers are being asked to do more with less. Examples include working remotely, job sharing and flexible hours. Productivity is unlikely to suffer, and offering employees opportunities to shape their work in ways that fit them also could reduce overhead costs, such as office space and utilities.
RELATED: Good-Bye 9-to-5, Hello Flexible Schedules & Improved Productivity >>
Looking for efficiencies during a recession should never translate to lax compliance with labor laws and employment regulations. Lapses in compliance could lead to costly fines. HR also should play a major role in managing the risks associated with staff reductions and subsequent severance packages to ensure all employees are treated fairly.
Recessions and other economic disruptions are an unwelcome but periodically unavoidable part of doing business. Strategic HR planning and practices that align with your business goals will enable your small company to adapt to changing conditions without experiencing irreversible losses. Request a consultation for more information on how Axcet human resources professionals can help you recession-proof your business.
.png){kind=logo}
Let us know what you think...